Pound to Canadian Dollar exchange rate forecast: How will GBP/CAD rates perform ahead?

GBPCAD Exchange Rate on the Rise with Brexit Party Ruling Out Tory Seat Contention

The Canadian dollar is this year’s best performing G10 currency, as reported by Reuters yesterday. It is probably not too surprising therefore that as sterling has been one of the worst performing, pound to Canadian dollar exchange rates have been testing 2-year lows, hitting points not seen since October 2017. What events are upcoming that might change the current trend?

Brexit developments to drive Sterling exchange rates

Sterling has been weaker on Brexit uncertainties, as investors await clear news on what Brexit means. The pound has been largely driven by rising and falling optimism on the type of Brexit on offer, it is widely accepted that prospects of a no-deal Brexit have seen the pound lower.

UK Prime Minister Boris Johnson to reveal Brexit plans

Looking ahead the new Prime Minister Boris Johnson may offer some greater clarity on what type of Brexit the UK will achieve, if one at all. So far however, it appears the plan appears to be to try to finalise some kind of deal with the EU, rather than seek no-deal. No-deal does however very much appear on the agenda, and this has kept the pound weaker.

Factors bolstering the Canadian Dollar strength against the Pound

For the Canadian dollar, the strength has emanated from a rising price of Oil, one of Canada’s key exports. Also, the higher interest rate of Canada at 1.75% is matched only by New Zealand and beaten by the United States at 2.25-2.5%.

A higher interest rate will typically strengthen the currency concerned, as it makes it more attractive to hold by investors. Whilst the US Federal Reserve and other central banks are on path to cut interest rates, the Bank of Canada has said according to Reuters, ‘they had no intention of cutting interest rates.’

This makes the Canadian currency more attractive to hold and has helped the currency to retain its strength. Current GBP/CAD exchange rates are 1.6387, if you have a position to buy or sell the currency then please do contact me to discuss further.